It May Take Time for Netflix's Ad Jingle to Become Popular

The concept of Netflix (NFLX -0.41%) is one that has become increasingly popular in recent years. The streaming service has become a go-to source for entertainment, offering a wide variety of movies and television shows. With its convenience and affordability, Netflix has become a favorite among many.

It will take some time to get used to the presence of advertisements.

On November 3rd, the company officially released its first streaming plan with ads. Unfortunately, it doesn't seem to be a popular choice. According to Antenna, a subscription analytics firm, only 9% of Netflix subscribers who signed up in November chose the ad-supported option. This is lower than the 15% of new HBO Max subscribers who chose the ad-supported tier during its first month in June of 2020.

A few days ago, Digiday, an online trade publication, reported that Netflix was not meeting the viewership guarantees for its ad tier, which would allow advertisers to receive refunds for ads that have not been aired yet.

The report mentioned five anonymous ad agency representatives, who noted that not all advertisers have chosen to reclaim their funds. According to the article, those who have are those whose campaigns were connected to the fourth quarter and holiday shopping season, and were redistributing the money before the end of the year.

It has only been a month since Netflix launched its ad tier, and it is too soon to determine its success. The streaming service has not heavily promoted the new feature, likely waiting for the launch of an account-sharing option in the beginning of 2021. Andrew Uerkwitz of Jefferies commented in a report last week that this could help Netflix in the long run by allowing them to reduce the cost of their services, which has caused an increase in customer churn. Ben Swinburne of Morgan Stanley also noted this in a report on Monday.

Ampere Analysis, a market research firm, reported on Tuesday that discounted ad-supported tiers could help all streaming services reduce their churn rate. This is because those who are leaving are usually younger and have lower incomes, making them more sensitive to pricing and content. As Netflix is one of the priciest streaming options, it is wise for them to find new ways to keep their viewers.

Clarifications and EnhancementsCorrections and amplifications are necessary to ensure accuracy in reporting. These clarifications and enhancements help to provide a more accurate representation of the facts.

In November, Netflix's ad-supported plan was responsible for 9% of the streaming service's new subscribers. An earlier version of this article incorrectly reported that the plan had accounted for 10% of new sign-ups. (Amended on December 20th).